Following the high‑profile introduction of the initial CACM 2.0-drafts in 2025, the European Commission’s proposal remains high on the agenda going further into 2026 – when the final adoption will be made. Kaj Forsberg, Energy Market Expert at Baltic Cable, shares some updates on CACM 2.0.
The CACM 2.0 is set to shape the next phase of Europe’s electricity market integration and will bring long awaited clarity to some of the governance-related issues that have proven to be complicated in the original CACM framework. As such, the day-to-day impact may not be significant to market participants, but it will hopefully serve to make the coordinated actions by Transmission System Operators (TSOs) and Nominated Electricity Market Operators (NEMOs) to work more smoothly and efficiently.
“However, certain topics within CACM 2.0 have raised concerns among market actors, as some proposals may also introduce risks.”, says Kaj Forsberg.
Pros and cons of a Market Coupling Operator Entity
One of the more controversial topics related to an update of the CACM guideline is the idea to release the NEMOs of their Market Coupling Operator (MCO) function. The function would instead be set up as a centralized legal entity and non-profit organisation.
“This would essentially separate the NEMOs from one of their most important functions up until now. Although one can understand the intention to establish a more straightforward governance structure to increase speed in market development processes, it is not completely clear that the pros will outweigh the cons.”, says Kaj Forsberg and continues:
“A potential benefit would be to reduce the complexity of decision-making and therefore increase abilities to develop market systems to changing needs. However, having a heavily regulated entity as the hub, at the centre of development, may not always provide the desired flexibility, adaptability and responsiveness to changes in the market.”
Flexibility at the risk of ambiguity – the development of CCR
Other aspects of the CACM 2.0 proposal suggest making Capacity Calculation Region (CCR) determination, which establishes regional TSO coordination platforms, more flexible. However, too flexible rules on CCR determination can create extremely complex tasks for the national regulators, and ACER, when deciding on CCRs and methodologies.
“There is a risk that too much flexibility could end up in overlapping methodologies to be applied, where NRAs and ACER will have to sort out which methodology that would have preference to which border on each single topic. One example is that if a single bidding zone border (which could include an HVDC interconnector) is assigned to two or more CCRs, it would be very difficult to know which methodology would have preference for various topics.”, says Kaj Forsberg and continues:
“One should bear in mind that the purpose of CCRs is to achieve TSO cooperation and harmonization across borders in a transparent and orderly manner. Establishing this will always require work, regardless of how flexible you can be when drawing the lines on a map.”
In the hopes of future clarity
During 2026, a few more updates on CACM 2.0 are expected before the final adoption. Once adopted the updated guideline will provide clarity, allowing progress and implementation to continue. One thing that remains certain is that the market will always need to evolve – and therefore also the ways that the parties facilitating it cooperate and interact.
“The draft of CACM 2.0 aims to improve governance and co-operation between parties. Baltic Cable are committed to making capacity available in additional timeframes and products. For this, we depend on clear legal and regulatory frameworks that support development and cooperation on all levels. This will prove valuable also when interconnection capacities and the numbers of parties increase further.”, says Kaj Forsberg and continues.
“This legal framework will be in place for quite some years, and we will continue seeing development in the market and in increased interconnections. To facilitate that even better, provisions facilitating inclusion of more HVDC Interconnectors in the European market in an orderly fashion should also be a valuable addition to CACM 2.0.”, Kaj Forsberg concludes.
